PATRIZIA: European Defence Spending Surge Could Reshape Smart Logistics Real Estate Demand Across Key Markets

Global real assets manager Patrizia released research at the annual MIPIM real estate trade fair in Cannes, France, on March 10, 2026, concluding that the surge in European defence budgets could spur a geographic "reframing" of smart logistics real estate investment — and potentially ignite the sector's next growth phase.

NATO's 5% GDP Commitment and Its Implications for Smart Logistics Real Estate

The research points to a historic commitment made by NATO allies at The Hague Summit in 2025: member nations agreed to invest 5% of GDP annually in defence spending by 2035. Of that total, 1.5% is earmarked for areas including critical infrastructure — encompassing energy supplies, logistics networks, and the strengthening of military and industrial bases. PATRIZIA's analysis suggests this allocation could translate into meaningful demand for smart logistics facilities across Europe.

Emile Poort, PATRIZIA Head of Investment Management Logistics, said: "The tailwinds are blowing favourably towards a strong military manufacturing revival, and we believe this will boost demand for 'smart logistics' assets around defence company clusters and associated infrastructure across Europe, driving a sustained upturn in investment."

Poort made the remarks while speaking at MIPIM, the annual real estate trade fair held in Cannes.

Demand Has Declined, But Investor Conviction Remains Elevated

PATRIZIA's research acknowledges that industrial real estate demand has declined sharply across European markets in the period following the COVID-19 pandemic, citing weak economic growth, rising cost pressures, e-commerce overcapacity, and a normalization in supply chain inventories. Despite that softening in occupier demand, investment volumes in logistics assets have remained above long-term averages. According to the firm, logistics assets accounted for 22% of total real estate capital deployed in 2025, compared with 13% in 2018 — a figure PATRIZIA characterizes as reflecting sustained investor conviction in the sector.

Winning Clusters: Munich, Paris, and Other European Hubs

PATRIZIA's research identifies several geographic clusters as likely focal points for smart logistics real estate investment tied to defence manufacturing activity. These include:

• Munich and Paris, along with Toulouse — home to Airbus operations — as locations with specialised labour, research and development capacity, and existing production infrastructure.
• The Netherlands, specifically the Eindhoven and Randstad regions.
• Italy, with Milan, Varese, and Turin cited as relevant markets.
• Prague, identified as a cluster location.

The firm also highlighted a concentrated pool of demand from a select group of "asset light" defence companies — described as national or European champions — that are expected to seek real estate partners for expansion and infrastructure rollout. Companies named in the research include Safran and Thales of France; Rheinmetall and Hensoldt of Germany; BAE Systems of the United Kingdom; Leonardo of Italy; and SAAB AB of Sweden.

Bespoke Assets, Net Leases, and Repurposing

PATRIZIA's research identifies several structural drivers shaping how smart logistics facilities will be developed and leased in the context of defence manufacturing demand:

• Repurposing of mid-box facilities and development of bespoke assets: High-specification sites tailored for military logistics and production are expected to be required, with sale-and-leaseback transactions anticipated to increase.
• Changing lease structures: PATRIZIA notes that "net lease" structures are expected to become more common to accommodate longer occupancy periods, providing better cash flow visibility for manufacturing tenants.

Market Outlook

PATRIZIA's research frames the anticipated defence spending ramp-up as a potential catalyst for the next upturn in the smart logistics real estate market — a sector that has faced headwinds since the post-pandemic normalization of supply chains. The research was presented at MIPIM 2026 in Cannes, France.